Iran Removes Four Zeros from Its Currency in Major Economic Overhaul, 10000 Old Rials Become 1 New Rial

Tehran | October 9, 2025 : In a landmark financial reform, Iran’s parliament has approved a plan to remove four zeros from the national currency, the rial, in an effort to simplify transactions and strengthen public confidence in the country’s battered economy. Under the new system, 10,000 old rials will be converted into 1 new rial, a change that marks the most significant currency adjustment in Iran in decades.

Transition Plan and Implementation

According to the Central Bank of Iran (CBI), the redenomination will be introduced gradually over the next few years. Both the old and new banknotes will circulate side by side during a transition period of up to three years, allowing citizens and businesses to adapt. The CBI has been granted two years to complete all logistical, legal, and technical preparations before the official rollout begins.

The new currency unit, the “new rial”, will be subdivided into 100 “qerans”, reviving a historical denomination used during the early 20th century. Officials clarified that the reform will not change the real value of money but will make accounting and pricing simpler across the country.

Reasons Behind the Move

Iran’s decision to slash four zeros stems from years of high inflation, international sanctions, and the continuous devaluation of the rial. The currency has lost over 95% of its value in the past decade, with one U.S. dollar now trading for several hundred thousand rials on the open market.

Everyday transactions have become cumbersome, with prices of common goods running into millions of rials. The redenomination aims to simplify daily commerce, reduce printing costs, and align the official currency with real-world usage, as most Iranians informally use the term “toman,” which already omits one zero from the rial.

Beyond practicality, the move is also psychological — a signal that the government is attempting to reset economic expectations and restore trust in the currency system.

Impact on the Iranian Economy

Economists note that removing zeros from a currency does not, by itself, resolve inflation or fiscal imbalances. While the change may improve readability and ease of transactions, the underlying monetary instability must be addressed for long-term success.

During the transition, Iran may face several challenges:

• Adjusting ATMs, banking software, and accounting systems to the new denomination.

• Educating the public to prevent confusion and potential fraud.

• Avoiding price rounding that could spark minor inflationary pressures.

If managed effectively, the reform could help stabilize market confidence and reduce transactional inefficiencies. However, without broader economic reforms — such as tightening monetary policy and improving fiscal discipline — experts warn that the new rial may eventually face the same fate as the old one.

Global and Dollar Impact

Internationally, the redenomination is expected to have minimal impact on global currency markets or the U.S. dollar. Iran’s economy remains largely isolated due to ongoing sanctions, limiting any direct global effects.

However, the change will make Iran’s exchange rate system simpler and clearer, improving communication in trade and statistics. For instance, instead of millions of rials per dollar, foreign exchange quotes will now be expressed in smaller, more manageable figures.

Some analysts believe that if the reform helps Iran stabilize its financial system and rebuild trade relations, it could eventually attract limited foreign investment — though such outcomes depend on political developments and sanctions relief.

Historical Context and Future Outlook

Iran joins a list of countries that have previously removed zeros to combat inflation — including Turkey in 2005, Brazil in the 1990s, and Zimbabwe in 2009. While some nations successfully stabilized their currencies, others saw inflation return when structural reforms were not sustained.

The Iranian government has framed the redenomination as part of a broader modernization agenda. Officials emphasize that the reform is not a devaluation but a currency reorganization aimed at making financial transactions more efficient and the economy more transparent.

For ordinary Iranians, the change could simplify daily life — turning a 1,000,000-rial grocery bill into just 100 new rials. Yet, for the reform to truly matter, Iran must tackle the root causes of its economic troubles: inflation, low productivity, and isolation from global markets.

Ultimately, Iran’s currency reform is a symbolic fresh start, one that aims to show the country’s determination to regain control of its monetary system. But as economists caution, removing zeros is the easy part — ensuring that they don’t return will be the real test.